Legal opinion. Minimum wage and its non conformity to the subsidence wage determined by state. by Liv Sandberg. within LO-TCO

Legal opinion Minimum wage and its non conformity to the subsidence wage determined by state by Liv Sandberg within LO-TCO Baltic Labour Law Project Case 40, Latvia 3 December 2001

2 Summary: In November 24, 1998 the Cabinet of Ministers (Cabinet) of the Republic of Latvia has adopted regulations No. 439 Regulations on minimum wage (protocol No. 63, paragraph 8), the article 1 of these regulations states the following: To determine minimum monthly wage (post salary) in the amount of 50,- lats and minimum tariff s rate of hour 0.269 lats (Annex No. 1) The above mentioned legal norm of those regulations do not conform to Latvia Labour Law Code s article 83, which provides that minimum monthly work pay in the scope of normal working time in basic work may not be smaller than subsistence wage established by state in that period of time in the Republic of Latvia and with article 84, which provides that minimum wages may not be smaller than subsistence wage determined by state. (Annex No. 2) When interpreting articles 83 and 84 of Latvia Labour Law code, the following conclusion can be made: from those legal norms it follows that it is obligation of state to determine subsidence wage. According to the regulations No. 180 Regulations on state s statistical information in year 2000 approved by Cabinet on September 14, 1999 (Annex No. 3 excerpt from regulations) the subsistence wage is determined by Central Statistical Bureau of Latvia in the assignment of state. Information prepared by Central Statistical Bureau is published in monthly Bulletin of Latvian Statistics which can be considered as official issue. According to the bulletin of this year March month subsistence wage in March of this year is 84.76 lats per capita (Annex No. 4) From the above mentioned it is seen that in Latvia minimum wage does not conform to subsistence wage that is determined in country, and there is a constant breach of State s law concerning that that the minimum wage may not be smaller than subsistence wage determined by state. We consider, that article 1 of Cabinet s regulations No. 439 does not conform to the following international documents: International Covenant on Economic, Social and Cultural Rights ( UN Assembly, 16 December, 1966), to which the Republic of Latvia has joined in May 4, 1990 and which is legally binding for Latvia from July 14, 1992. (Annex No. 5) * ILO Convention No. 131 Convention concerning minimum wage fixing. This convention is ratified by Latvia in January 12, 1993. (Annex No. 6) European Social Charter Part I, 4 which provides All workers have the right to a fair remuneration sufficient for a decent standard of living for

3 themselves and their families. (Annex No. 7) Legal norm included in the article 1 of regulations No. 439 Regulations on minimum wage adopted by the Cabinet of the Republic of Latvia in November 24, 1998 do not conform to national law Latvia Labour Law Code s article 83 and article 84. EXPERT OPINION CONCLUSIONS Latvia has minimum wages decided on by regulations from the Cabinet of ministers. Five of the different member states in the EU have a minimum wage decided by law. Other member states have minimum wages decided by collective agreement. In many countries it is possible to give the collective agreement legal implications in areas outside the area it was originally decided for. In German, French and Belgian law there is the possibility for the authorities to expand the collective agreement to everyone who falls within the principal area of application of the collective agreement. Such a decision calls for an examination to establish whether the organisations in the agreements can be considered being representative of the line of business where they operate. This possibility exists also in Finland. The regulations concerning the situation we have in this case are built in different ways in different international provisions. Some are establishing a right to wages or a certain living standard, for example the European Social Charter recognise the right of workers to a remuneration such as will give them a decent standard of living and the right of everyone to the enjoyment of just and favourable conditions of work, which ensure; fair wages, while others speak about the duty to establish a system of minimum wages which covers all groups of wage earners ILO convention 131. In international provisions, the minimum wages shall have the force of law and not be subject to abatement, article 2 of ILO convention nr 131 and article 3 of convention nr 26. The minimum wage in Latvia has probably been subject to abatement, since it is now lower that the subsistence wage, and since it shall, according to law, be higher than the subsistence wage. The persons who do not apply the minimum wages shall be liable to penal sanctions. The level of the minimum wages shall include the needs of the workers and his family, taking into account the general level of wages in the country, the costs of living, social security, relative living standards of other social groups and economic factors, article 3. The ILO convention

4 does not say anything about how high the subsistence wage in any country shall be and the close following by the minimum wage and the subsistence wage that is granted in Latvia. It is important that the regulations adopted by the Cabinet of Ministers (on the minimum wages) have the force of law, article 2 ILO convention nr 131. The information given to me by the LBAS lawyers, tells me however that these regulations do have the force of law. Adequate inspection shall be used as a measure to ensure the effective application of all provisions relating to minimum wages, article 5. The background of this case says nothing about if investigation takes place or not. This ILO convention, nr 131, was ratified by Latvia in 1993. Also the European Social Charter, the International Covenant on Economic, Social and Cultural Rights and the Charter of the Fundamental Social Rights of Workers speak about a fair remuneration, a decent standard of living and an equitable wage What is a fair remuneration is not stated. Nothing about these facts is mentioned in the text. The question from Latvia can only be answered in accordance with general basic law principles. Laws should be obeyed. The regulations have the force of law, but they could to be even more effective, be established in law. International provisions can only help in the aspect that they point out what is a fair remuneration and a decent standard of living. The background in the case does not say anything about these facts. There is not adequate information in the background, to decide whether Latvia has any real control or following up of the provisions of minimum wages. The question if Latvia follows the international norms of fair wages and a decent standard of living is not easily answered. The responsibility of fulfilling international standards is many times handed over to the trade unions. Their ability to bargain collectively and their right to strike, function as a regulator of the labour market, the wages to be paid and other terms for the workers. INTERNATIONAL EXPERT OPINION LATVIAN LAW

5 Protocol nr 63 Regulations on minimum wage Paragraph 8 To determine minimum monthly wage (post salary) in the amount of 50,- lats and minimum tariff s rate of hour 0.269 lats (Annex No. 1) Latvian Labour Code Article 83 Minimum monthly work pay in the scope of normal working time in basic work may not be smaller than the subsistence wage established by the state in that period of time in the Republic of Latvia Article 84 The minimum wages may not be smaller than the subsistence wage determined by the state. (Annex No. 2) Annex nr 3 (excerpt from regulations) Regulations on state s statistical information in the year 2000 The subsistence wage is determined by the Central Statistical Bureau of Latvia in the assignment of the State In Latvia, those regulations are equally valid as law. This creates a situation of controversy. In the information prepared by the monthly Bulletin of Latvian Statistics, it is said that the month subsistence wage in March was 84.76 lats per capita. The minimum monthly wage is determined to 50 lats, paragraph 8 protocol nr 63 from 1988. It is then clear that the minimum monthly wage is lower than the subsistence wage. There is through this a breach of Latvian law of the Latvian Labour Code article 83 and 84. SWEDISH LAW In Sweden there are no direct regulations on minimum wage by law. In Sweden the most important factor for guaranteeing wages are the collective agreements, which prescribe for the lowest levels of wages in that line of business. There is however the possibility of getting a declaration by the court that your wages are unreasonable, according to paragraph 36 of the law on agreements. The minimum standard of living is determined by norms settled by law and the authorities. If you do not receive enough means/wages to keep you and your family, the social authorities will grant you subsidies, so that you reach a reasonable standard of living.

6 The general level of wages are guaranteed through collective agreements and protected by the rights of negotiation and strike ascribed to the trade unions. Through the workers right to negotiation and the signing of collective agreements, there is obviously a high degree of settling minimum wages. If the employer is in breach of the collective agreements TU/employees can complaint to court about breach of contract and receive damages. The trade unions are in Sweden the biggest guarantor of wages. The fact that the trade unions have such a big number of members most employees are guaranteed their wages in this way. Another guarantor is the fact that the employer is obliged to guarantee the workers in the same workplace the rights given to the workers in the collective agreement, so that also the unorganized workers are given the same rights as the other workers. Law (1915:218) on agreements 36 Terms in an agreement can be modified, if the terms are unreasonable if you look at the contents of the agreement, the circumstances at the making of the agreement, incidents that have occurred later and the circumstances in general. If the term has such an importance for the agreement that it cannot reasonably be demanded that the agreement in general shall be valid with an unchanged content, the agreement can be modified also in other ways or it can totally be left without consideration. At an examination according to the first paragraph special consideration shall be taken to the need for protection for some one who in his quality as a consumer or other has an inferior position in the relationship of the agreement. It is usually the employer who decides on the level of wages to be paid to the employee. If the level is very low, it can be modified or changed by using this paragraph. A salary that is not appropriate can be modified or changed in accordance with this paragraph. The terms in the dominating collective agreement in the business is a reasonable norm for what is appropriate according to 36 of this law. In the use of 36 regard shall be taken to the fact that a party might be in an inferior position in the agreement and the employee is normally in such an inferior position.

7 INTERNATIONAL LAW ILO Conventions Convention nr 131 Minimum wage fixing Convention Article 1 1. Each Member of the International Labour Organisation which ratifies this Convention undertakes to establish a system of minimum wages which covers all groups of wage earners whose terms of employment are such that coverage would be appropriate. Article 2 1. Minimum wages shall have the force of law and shall not be subject to abatement, and failure to apply them shall make the person or persons concerned liable to appropriate penal or other sanctions. 2. Subject to the provisions of paragraph 1 of this Article, the freedom of collective bargaining shall be fully respected. Article 3 The elements to be taken into consideration in determining the level of minimum wages shall, so far as possible and appropriate in relation to national practice and conditions, include-- (a) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups; (b) economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment. Article 4 1. Each Member which ratifies this Convention shall create and/or maintain machinery adapted to national conditions and requirements whereby minimum wages for groups of wage earners covered in pursuance of Article 1 thereof can be fixed and adjusted from time to time. 2. Provision shall be made, in connection with the establishment, operation and modification of such machinery, for full consultation with representative organisations of employers and workers concerned or, where no such organisations exist, representatives of employers and workers concerned. 3. Wherever it is appropriate to the nature of the minimum wage fixing machinery, provision shall also be made for the direct participation in its operation of:

8 (a) representatives of organisations of employers and workers concerned or, where no such organisations exist, representatives of employers and workers concerned, on a basis of equality; (b) persons having recognised competence for representing the general interests of the country and appointed after full consultation with representative organisations of employers and workers concerned, where such organisations exist and such consultation is in accordance with national law or practice. Article 5 Appropriate measures, such as adequate inspection reinforced by other necessary measures, shall be taken to ensure the effective application of all provisions relating to minimum wages. Convention nr 26 Minimum Wage-Fixing Machinery Convention, 1928 Article 1 1. Each Member of the International Labour Organisation which ratifies this Convention undertakes to create or maintain machinery whereby minimum rates of wages can be fixed for workers employed in certain of the trades or parts of trades (and in particular in home working trades) in which no arrangements exists for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low. 2. For the purpose of this Convention, the term trades includes manufacture and commerce. Article 2 Each Member which ratifies this Convention shall be free to decide, after consultation with the organisations, if any, of workers and employers in the trade or part of trade concerned, in which trades or parts of trades, and in particular in which home working trades or parts of such trades, the minimum wage-fixing machinery referred to in Article 1 shall be applied. Article 3 1. Each Member which ratifies this Convention shall be free to decide the nature and form of the minimum wage-fixing machinery, and the methods to be followed in its operation: 2. Provided that-- (1) before the machinery is applied in a trade or part of trade, representatives of the employers and workers concerned, including representatives of their respective organisations, if any, shall be consulted as well as any other persons, being specially qualified for the purpose by their trade or functions, whom the competent authority deems it expedient to consult;

9 (2) the employers and workers concerned shall be associated in the operation of the machinery, in such manner and to such extent, but in any case in equal numbers and on equal terms, as may be determined by national laws or regulations; (3) minimum rates of wages which have been fixed shall be binding on the employers and workers concerned so as not to be subject to abatement by them by individual agreement, nor, except with general or particular authorisation of the competent authority, by collective agreement. Article 4 1. Each Member which ratifies this Convention shall take the necessary measures, by way of a system of supervision and sanctions, to ensure that the employers and workers concerned are informed of the minimum rates of wages in force and that wages are not paid at less than these rates in cases where they are applicable. 2. A worker to whom the minimum rates are applicable and who has been paid wages at less than these rates shall be entitled to recover, by judicial or other legalised proceedings, the amount by which he has been underpaid, subject to such limitation of time as may be determined by national laws or regulations. Article 5 Each Member which ratifies this Convention shall communicate annually to the International Labour Office a general statement giving a list of the trades or parts of trades in which the minimum wage-fixing machinery has been applied, indicating the methods as ILO convention nr 131 was ratified by Latvia in 1993. Each country shall establish a system of minimum wages, article 1, and convention 131. Minimum wages shall have the force of law and shall not be subject to abatement. Failure to apply shall make the person liable to appropriate penal sanctions, article 2. The elements taken into consideration in determining the levels of minimum wages shall include the needs of workers and their families costs of living and social security benefits. Minimum wages shall be fixed or adjusted from time to time. Provision shall be made for direct participation in the wage fixing machinery of - representatives of organisations of employers and workers - persons having recognized competence for representing the general interests of the country Adequate inspection reinforced by other necessary measures, shall be taken to ensure the effective application of provision relating to minimum wages, article 5.

10 There is also a Convention nr 26, whereby minimum rates of wages can be fixed for workers employed in certain of the trades or parts of trades (and in particular in home working trades) in which no arrangements exist for the effective regulation of wages by collective agreement or otherwise and in businesses where wages are exceptionally low. Representatives of the employers and workers concerned shall be consulted before the machinery is applied. There is also the right to recover the amount which the worker has been underpaid, article 4. A list of the trades or parts of trades in which the minimum wage-fixing machinery has been applied shall every year be given to the International Labour Office. Recommendation nr 30 Minimum Wage-Fixing Machinery Recommendation II (1) The minimum wage-fixing machinery, whatever form it may take (for instance, trade boards for individual trades, general boards for groups of trades, compulsory arbitration tribunals), should operate by way of investigation into the relevant conditions in the trade or part of trade concerned and consultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rates of wages should in any case be solicited and be given full and equal consideration. (2) (a) To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers concerned, through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wagefixing body; in any case, where representation is accorded to one side, the other side should be represented on the same footing. The wage-fixing body should also include one or more independent persons whose votes can ensure effective decisions being reached in the event of the votes of the employers' and workers' representatives being equally divided. Such independent persons should, as far as possible, be selected in agreement with or after consultation with the employers' and workers' representatives of the wage-fixing body. III For the purpose of determining the minimum rates of wages to be fixed, the wage-fixing body should in any case take account of the necessity of enabling the workers concerned to maintain a suitable standard of living. For this purpose regard should primarily be had to the rates of wages being paid for similar work in trades where the workers are adequately organised and have concluded effective collective agreements, or, if no such

11 standard of reference is available in the circumstances, to the general level of wages prevailing in the country or in the particular locality. Provision should be made for the review of the minimum rates of wages fixed by the wage-fixing bodies when this is desired by the workers or employers who are members of such bodies. (2) A sufficient staff of inspectors should be employed, with powers analogous to those proposed for factory inspectors in the Recommendation concerning the general principles for the organisation of systems of inspection adopted by the General Conference in 1923, to make investigations among the employers and workers concerned with a view to ascertaining whether the minimum rates in force are in fact being paid and taking such steps as may be authorised to deal with infringements of the rates. As a means of enabling the inspectors adequately to carry out these duties, employers might be required to keep complete and authentic records of the wages paid by them, or in the case of home workers to keep a list of the workers with their addresses and provide them with wage books or other similar record containing such particulars as are necessary to ascertain if the wages actually paid correspond to the rates in force. The ILO recommendations are not legally binding. They are issued to be of counsel for those who apply the convention - to authorities and to courts. The recommendation calls for investigation into relevant conditions. The investigation shall include consultation with the interests affected. There shall be a wage fixing body, made up of the employees and workers concerned. It shall also decide on review of the levels decided on. The wage fixing body shall work with the aim that workers shall maintain a suitable standard of living. There shall be a staff of inspectors with a view to ascertaining whether the minimum rates in force are in fact being paid and taking such steps as may be authorized to deal with infringements of the rates. Conclusion Latvia has established a system of minimum wages. These wages have the force of law. The person liable for applying the rules shall be subject to penal sanctions if these rules are not applied. It is doubtful whether these rules are correctly applied in this case, since the minimum wage is lower than the subsistence wage. The minimum wages should not be subject to abatement. Nothing is said in this case about whether the participants in the wage fixing body are representatives of organisations of employers and workers or if they are persons having recognized competence for representing the general interests of the country. If the minimum wages have been subject to abatement, there has been a breach of ILO convention nr 131 and 26. The recommendation is not legally binding.

12 The ILO conventions set up the following minimum standards: a) NORM; There has to be a system of minimum wages, article 1, c 131 The minimum wages shall not be subject to abatement, article 2, c 131 b) EFFECTIVISATION; Each member shall create and/or maintain a machinery for minimum wages, art 4, c 131 c) CONTROL; c1) National; Consultation with representative organisations of employers and workers, art 4, c 131 Direct participation of representatives of organisations of employers and workers, art 4 p 3, c 131 Adequate inspection, art 5 A system of supervision and sanctions, art 4, c 26 c2) International; Annual reports by the members, article 22 Constitution of the ILO Complaint by Association of employers or workers, article?, Constitution of the ILO Communication of representation from association of employers or workers by the Governing Body to the Government against which it is made, article 24 Constitution of the ILO Members complaint (member against member), article 26 Constitution of the ILO (communication, article 24) d) SANCTIONS; d1) National: Recovery of the amount that the worker has been underpaid, article 4, c 26 Penal or other appropriate sanctions, art 2, c 131 d2) International; Communication of the Report of the Commission of Inquiry to the Governing Body and to each of the governments concerned in the complaint, publication, article 29 Constitution of the ILO Referral of the complaint to the International Court of Justice, article 30 Constitution of the ILO

13 Judgement from the International Court of Justice, article 31-32 Constitution of the ILO European Social Charter Article 4 - The right to a fair remuneration With a view to ensuring the effective exercise of the right to a fair remuneration, the Parties undertake: to recognise the right of workers to a remuneration such as will give them and their families a decent standard of living; to recognise the right of workers to an increased rate of remuneration for overtime work, subject to exceptions in particular cases; to recognise the right of men and women workers to equal pay for work of equal value; to recognise the right of all workers to a reasonable period of notice for termination of employment; to permit deductions from wages only under conditions and to the extent prescribed by national laws or regulations or fixed by collective agreements or arbitration awards. The exercise of these rights shall be achieved by freely concluded collective agreements, by statutory wage-fixing machinery, or by other means appropriate to national conditions. The European Social Charter has been signed but not yet ratified by Latvia. The parties to the Charter undertake to provide a fair remuneration. A remuneration which gives the right to a decent standard of living. What is a fair remuneration is not stated. The talk about a decent standard of living defines the level of a fair remuneration. Fair remuneration constitutes one of the basic economic objectives of human activity. Contracting Parties who have accepted this article should take the necessary measures to guarantee, in all sectors of the economy, fair remuneration in the full social and economic sense of the term, i.e. a remuneration which takes account of the basic economic, social and cultural needs of workers and their families, the special efforts made by workers during overtime and the right to equal pay for work of equal value for men and women workers. That means that a regulation for minimum wage must not fall below the regulation for a fair remuneration. The exercise of these rights shall be achieved by freely concluded collective agreements, by statutory wage fixing machinery, or by other means appropriate to national conditions. This provision puts great weight on the

14 trade unions and their possibilities of concluding collective agreements. The Charter thus giving the trade unions the greatest role to play in the guaranteeing of the rights to a fair remuneration. The following considerations have been taken by the Committee of Ministers of the Council of Europe 1. A decent standard of living must take account of the fundamental social, economic and cultural needs of workers and their families in relation to the stage of development reached by the society in which they live 1. The wage paid to the largest number of workers can be taken as representative of the wage level in that country 2. A point of reference - the wage thus defined was to be a point of reference any wage which deviated from this to an excessive extent could no longer be considered as sufficient to permit a decent standard of living in the society under consideration The Committee also has intentions of using a model used by other international organisations, for example a model used by the OECD, but then changing this model slightly. Conclusion If a minimum monthly wage of 50 lats can be considered a fair remuneration or not, is not easy to decided without taking into consideration the level of costs and subsidies in the country (social benefit payments, family and housing subsidies, educational and cultural subsidies, tax concessions and so on), which are not mentioned in the background text. You can also, as a point of reference, use the amount of wages paid to the largest number of workers in the country of which there is also, no mention in the background text. There is with this material not enough information to say if there is a breach against the European Social Charter. The ESC has been signed but not ratified by Latvia and thus the collective complaints procedure cannot be applied. The Social Charter sets up the following minimum standards: a) NORM; Remuneration for a decent standard of living, art 4 b) EFFECTIVISATION; Collective agreements, statutory wage fixing machinery, other means

15 appropriate to national sanctions, art 4 c) CONTROL; c1) National; None is prescribed for c2) International; Collective complaints procedure, part IV art D (Compliance if applied to the greater majority of workers concerned, art 1:2 d) SANCTIONS; d1) National; None are prescribed for d2) International; Adoption of a Resolution by the Committee of Ministers (a recommendation addressed to the state concerned), art 9 Additional protocol providing for a system of collective complaints. International Covenant on Economic, Social and Cultural Rights Article 7 The States to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular: Remuneration which provides all workers, as a minimum, with: Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; A decent living for themselves and their families in accordance with the provisions of the present Covenant; Safe and healthy working conditions; Equal opportunity for everyone to be promoted in his employment to an appropriate higher level, subject to no considerations other than those of seniority and competence; Rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as well as remuneration for public holidays. These provisions speak also about a remuneration which provides all workers as a minimum with fair wages and a decent living. However nothing is commented on what is a fair remuneration or a fair wage. Conclusion Latvia is a party to the Covenant and it is in that way legally binding to the country. There are however no real sanctions to the Covenant, which makes it a relatively toothless instrument of operation. There is however a very well

16 developed reporting system. There have also been discussions on the possibility of drafting an optional protocol providing for a system of individual complaints. So far there is no system of complaints and such a system would improve the protection offered by the Covenant. The content of articles 6-9 of the Covenant are thought mainly to be a supplement to the protection already offered by the ILO. It is impossible to know whether a breach against the international covenant has been made or not. Fair wages and decent standard of living are terms which are not easily interpreted and there is also no given standard to apply these expressions to. No level of wages is stated in this case. The carrying out of these rights is supposed to take place through legislation. In this way it is not the trade unions that are to take the greatest responsibility for the carrying out and guaranteeing of the rights in the covenant. The covenant sets up the following minimum standards; a) NORM; Fair wages, art 7 Decent living, art 7 b) EFFECTIVISATION; Parties to the Covenant undertakes to take steps individually and through international assistance and co-operation, especially economic and technical to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures, art 2 c) CONTROL; c1) National; None is prescribed for c2) International; States party to the Covenant undertake to submit reports on the measures, which they have adopted and the progress made in achieving the observance of the rights recognized in the Covenant, art 16 a) all reports shall be submitted to the Secretary-General of the United Nations, who shall transmit copies to the Economic and Social Council for consideration in accordance with the provisions of the present Covenant d) SANCTIONS;

17 d1) National; None are prescribed for d2) International; None are prescribed for European Community Law The Charter of the Fundamental Social Rights of Workers Employment and remuneration 4. Every individual shall be free to choose and engage in an occupation according to the regulations governing each occupation. 5. All employment shall be fairly remunerated. To this end, in accordance with arrangements applying in each country: (i) workers shall be assured of an equitable wage, i.e. a wage sufficient to enable them to have a decent standard of living; (ii) workers subject to terms of employment other than an open-ended full time contract shall benefit from an equitable reference wage; (iii) wages may be withheld, seized or transferred only in accordance with national law; such provisions should entail measures enabling the worker concerned to continue to enjoy the necessary means of subsistence for him or herself and his or her family. 6. Every individual must be able to have access to public placement services free of charge. Implementation of the Charter 27. It is more particularly the responsibility of the Member States, in accordance with national practices, notably through legislative measures or collective agreements, to guarantee the fundamental social rights in this Charter and to implement the social measures indispensable to the smooth operation of the internal market as part of a strategy of economic and social cohesion. The Charter of the Fundamental Social Rights of Workers from the European Union, adheres to the ILO Conventions and the Social Charter adopted by the European Council including article 117 of the EC Treaty (which refers to the two above mentioned documents). The Charter is a politically, but not legally binding document. Part one speaks about the rights guaranteed in the Charter, for example;

18 freedom of movement, employment and remuneration, improvement of living and working conditions, social protection, freedom of association and collective bargaining, vocational training and many others and part two deals with the carrying out of the duties within the Charter the responsibility of the member states and when in time these shall be carried out. Article 5 provides that an equitable wage shall be assured or received. This emphasizes enforcement of the standard, without specifying the method of wage settling or the method of providing for enforcement of the standard set. The same institution or instrument that fixes the wage does not have to be responsible for assuring it. It is not clear whether the decent standard of living for the worker includes also the worker s family, as is explicit in the clause concerned with withholding wages in the same article. The equitable reference wage is not defined. Only workers appear in the final draft of the Charter and so the question of what happens to for example self-employed people is not answered. It is the responsibility of the member states to carry out the Charter. They shall through legislation and collective agreements guarantee the basic social rights and effectuate the social measures that are needed to make the inner market function properly, article 27. There arise however problems in assessing whether and which collective agreements that are sufficiently comprehensible in scope and coverage to provide an adequate standard. The European Commission has outlined basic principles on equitable wages for the member states in a non-legally binding way. In the commissions plan of action is stated that member states should ensure that the measures taken do not force low-paid workers into the informal economy and do not encourage unlawful employment practices. They should also ensure that wages agreed under the contract of employment are paid in full. Five of the different member states in the EU have a minimum wage decided by law. Other member states have minimum wages decided by collective agreement. Conclusion All workers shall be fairly remunerated, they shall be assured an equitable wage a wage sufficient to enable them to have a decent standard of living. If Latvia wants to become a member of the European Union they should have to adopt these regulations as they are a standard and a limit for the member countries in the European Union. The member

19 countries must ensure that the low-paid workers are not forced to work within the informal economy, which is often the result of a large underpaid mass of workers. Without knowing the level of what is an equitable wage it is difficult to know whether a breach against these provisions has been made. In stressing the role of collective agreements in the effectivisation process, the role of the trade unions in guarding living standards is accentuated. EU law sets up the following minimum standards; a) NORM; Fairly remunerated, equitable wage, decent standard of living, art 5 b) EFFECTIVISATION; Legislative measures and collective agreements, art 27 c) CONTROL; c1) National; - Up to the national legislator and the parties of the labour market c2) International; Report by the Commission on the application of the Charter by the Member States and by the European Community, art 29 The report shall be forwarded to the European Council, the European Parliament and the Economic and Social Committee. National Trade Union Contact LBAS - Free Trade Union Confederation of Latvia Phone: + 371 7035900 Fax: +371 2276649 E-mail: lbas@com.latnet.lv Legal Responsible Andris Katlaps Phone: + 371 7035901 ltds@takas.lt INTERNATIONAL EXPERT

20 Liv Sandberg liv.sandberg@fackjuridik.com Sponsored by 1 1 Swedish International Development Cooperation Agency